NEW YORK (TheStreet ) -- NovaGold (NG) is the sexy, high profile junior gold miner in Alaska, but investors shouldn't forget about its nearby competitor International Tower Hill (THM) or kid with the bad reputation down the block Northern Dynasty (NAK)
All three junior gold companies have big deposits in Alaska and all have risk.
As the below chart shows, NovaGold, International Tower and Northern Dynasty mirrored each other last year until September, when NovaGold broke out on takeover rumors that helped push the company to a 125% return for 2010. International Tower Hill, on the other hand, returned only 38%, while Northern Dynasty jumped 67.5%.
NovaGold has one of the largest gold mines in the world, Donlin Creek in Northwest, Alaska, where it partners 50/50 with Barrick Gold (ABX). While NovaGold is seven years away from production at Donlin, the mine could produce 1.3 million ounces of gold annually with NovaGold bringing home half of that. The mine has a 25 year life span with 33.6 million ounce gold reserves, averaging 2.2 grams. The miner will be able to produce the gold for around $400 an ounce.International Tower has 100% ownership of the Livengood gold project near Fairbanks, Alaska, which has 13 million ounces of gold resources, one of the biggest discoveries in the past 20 years. It's still not as big as NovaGold's project and grade is, on average, 0.83 grams. The company just found higher grade, however, the highest at 2.07 grams per ton, and more results are trickling out. Rough cash costs are $490-$530 an ounce and the company is looking at 2016 for production when it can produce 833,000 ounces per year for 12.6 years. International Tower Hill is lucky in that its deposit is so big, which can offset low grade, but it needs gold to stay above $750-$800 an ounce for its deposit to make sense.
Northern Dynasty owns half the Pebble Project in Southwestern Alaska, the remainder is owned by Anglo American. Pebble has a 25 year mine life, although it could extend up to 78 years, and has measured, indicated and inferred resources of 80.6 billion pounds of copper and 107.3 million ounces of gold. Production is expected in 2019 and using gold as a byproduct, Northern Dynasty could produce a pound of copper for negative 10-15 cents, which could mean up to $3 billion in profits a year, pretax. Counting gold as the main metal, cash costs would be under $100 an ounce.
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